After passing teacher pay raises and providing revenue to fund them, some lawmakers thought the teacher walkout would be short lived. However, as the walkout closes in on its fourth day, some are wondering what the options are to provide more revenue to fund education and other core state services.
Following are some of the options lawmakers have talked about in the past that could still be on the table. They have varying levels of support, which is tricky when considering the super majority new revenue measures require.
- Income Tax for High Earners – This would basically dial back some of the income tax cuts that have happened over the last 10 years. It would add back two tax brackets for people who earn more than $100,000 a year. This would be a difficult bill to pass because it must meet the requirements of State Question 640 and would require a 76% majority in both houses of the legislature. Estimates are it could bring in as much as $300 million in new revenue. This was filed as HB3113 by Eric Proctor. However, it is currently dead because it was not heard in the House of Representatives for bills to advance in the legislative process. It could be revived by suspending rules in the House of Representatives, or the language could be put in what is called a ‘shell bill’. A shell bill is a bill that does not currently have any language in it but is advancing through the legislative process so it is available for ideas that emerge late in the legislative process.
- Eliminating the Income Tax Trigger – This was an idea that was floated by Republican Representative Roger Ford on Monday. It would not necessarily create new revenue, but it would eliminate the trigger that reduces income taxes automatically if there is any increase in revenue in the state. Many blame this trigger for the state’s current revenue problems because income taxes were permanently reduced by the trigger in reaction to a temporary increase in state revenue caused by an oil and gas boom.
- Wind Tax Credit Caps – This would cap the tax credits the wind industry is able to receive for building new wind farms at $35 million. It would not create new revenue, but it would prevent the state from allocating money to an industry instead of spending it on state services such as education or mental health. This was part of the package of bills that passed the House of Representatives on March 26. However, it was eliminated two days later when the bill was amended to remove this language and put in language that repealed the $5 per night hotel and motel tax. It could be placed in another bill at a later time. One potential vehicle is HB1035XX. This proposal would need a 51% majority in both houses. This is controversial for some school districts who have benefitted greatly from the construction of wind farms. These schools have received enough in local ad valorem taxes to be taken off of the statewide school funding formula. In other words, many of these districts are receiving little or no money from the state to operate their local schools.
- Wind Production Tax – This is similar to the gross production tax placed on the oil and gas industry. New farms have this tax, but established wind farms do not have such a production tax. House Majority Floor Leader has said that adding a production tax for wind is part of diversifying Oklahoma’s energy economy. This proposal seems to have the most traction for getting additional revenue. Because it is a new tax, it would have to receive a 76% majority in both houses under the provisions of State Question 640. This could raise as much as $25 million annually.
We anticipate this will be one of the measures heard by the Joint Committee on Appropriations and Budget on Wednesday, April 4. A logical vehicle for this could also be HB1035XX.
- Repeal of Capital Gains Tax – The capital gains tax is the tax that is also commonly referred to as the death tax. This reverts the tax code, and would allow the state to collect taxes on the sale of property and stock. It is projected to raise up to $120 million in revenue. Senator Dave Rader, a Republican from Tulsa filed HB1086, but it is currently stalled in the House of Representatives. This is the bill House Democrats attempted to bring directly to the floor for a vote on April 2 and April 3. It would require a 51% majority in both houses to pass.
- Ball and Dice Games – This would allow casinos to have ball and dice table games. The games they currently have are played with cards or are electronic versions. This is projected to raise up to $20 million. House Bill 1013XX passed the House of Representatives on March 26. The Senate did not take it up. This bill requires a 76% majority in the Senate to go to the governor.
At the end of special session on Wednesday in the House of Representatives, Majority Floor Leader told lawmakers the Senate had notified him that it would hear House Bill 1013XX on Thursday.
- Third Party Amazon Vendor Tax – Oklahomans began paying sales tax on Amazon orders in March 2017. However, a loophole in the law does not require third-party vendors on Amazon to collect the taxes. This could generate up to $20.5 million dollars annually. Closing the loophole has also been a favored way among lawmakers to generate new revenue.
House Bill 1019XX passed the House of Representatives Wednesday with a vote of 92 to 7.
- Hotel and Motel Tax or Fee– This was part of the package that passed the House of Representatives on March 26. However, after lobbying from hoteliers, the $5 per night fee could not get enough support to pass the state senate. It was repealed two days later. It was project to generate around $40 million annually in new revenue.